My Tradewinds

IOPC: Calming troubled waters

The head of the international oil spill compensation organisation says the system has been a success over the past four decades

Jose Maura knows first-hand what it is like to experience pollution from an oil spill. He saw the beaches of northern Spain where he used to play as a boy stained by the cargo of thick heavy fuel oil that spewed from the stricken tanker Prestige in November 2002.

At the time he was four years into his career at the United Nations’ International Oil Pollution Compensation (IOPC) Funds, which he has headed as secretary general for a decade.

Despite its impact, the Prestige disaster taught him that spills can be cleaned up and the compensation issues successfully resolved.

“When you go to the beach and you see that everything is black, then you get the smell, it is not a nice feeling,” he remembers of the spill.

“So I understand why people get upset, but with good cleaning technique and without damaging the environment, we know how to resolve it and we are seeing that all the time. Now you see the beaches [of northern Spain], everything is gone, it is immaculate and the environment has been restored.”

Auditor says oil-spill fund in sound financial health

Each year the London-based IOPC collects a levy from 400 oil-receiving companies in the 115 countries that are signatories to the main oil spill compensation conventions.

The money is used to meet clean-up costs and compensate victims for the damage that can be caused by the marine transportation of, on average, 1.5 billion tonnes of oil round the world every year.

In October this year, the IOPC celebrated its 40th anniversary, and Maura says its history has shown it to be an effective system to cope with spills.

It has resolved some of the industry’s most notorious pollution incidents, including the Prestige (63,000 tons of oil spilt off Spain, Portugal and France), Sea Empress (72,000 tons off Wales in 1996), Erika (25,000 tons off France in 1999) and Hebei Spirit (10,800 tons off South Korea in 2007) and paid out more than $870m in compensation over that time.

+ point

Statistics show oil spills are getting fewer but the environmental protection issues, litigation and compensation culture that surround such disasters are getting tougher.

In the peaceful setting of his office by the River Thames, Maura reflects that settling compensation claims can be violent as well as highly litigious.

“Following the Erika, we set up a claims office in France in the former office of a bank and there was one claimant who was not a happy man because we did not pay compensation to him.

He decided to take the case into his own hands and take a front-end loader and smash it against the office. Luckily it was on a Saturday morning and nobody was there, but that is the level of things that you can face.”

Failures to pay tanker spill compensation to be investigated

The Erika generated 7,000 claims, of which 700 were contested by the IOPC in the French courts. “That is a lot, but we won 99% of the cases in France, which means we have good lawyers, but it also means we’ve done a lot of work behind the scenes to assess the claims,” Maura says.

The Hebei Spirit spill generated 127,483 claims amounting to KRW 4.2bn ($3.8m). The IOPC had to employ 700 extra people to cope.

The organisation has also found itself caught up in the political and legal rows that inevitably follow an oil spill. Under the international conventions, shipowner and IOPC liability is limited.

But that limited liability is being tested in the courts of Madrid and London in a row that followed a Spanish ruling that the Prestige’s owner, Mare Shipping, and its P&I insurer, the London Club, are fully liable to foot the whole $1.6bn bill for the disaster.

Maura is too diplomatic to be drawn into comment on the case, but such court decisions have raised questions over whether all countries are being treated equally under the oil compensation regime.

The main contributors to the fund, such as Japan and India, are riled when they see some developed countries seeking to get a better deal.

Probe into Sanchi disaster should act as catalyst for improvement

There are other issues for the IOPC to tackle. China is by far the world’s largest oil importer, accounting for 400 million tons annually, but it is not one of the 115 signatories to the main oil spill compensation conventions. It has its own national pollution laws that fall well short of the funds available through the IOPC.

The Sanchi disaster in January 2018 could have been a pollution disaster for China had the suezmax tanker, which was hit by the bulker CF Crystal in the South China Sea, been carrying crude oil rather than condensate.

Maura has tried to persuade the Chinese and others to get onboard with the IOPC. “The problem is, if you don’t have a convention, you only have national legislation, and that is often not much. The beauty of a convention is you have uniform rules, you know where you stand,” he points out.

“You have strict liability and you know that in the end someone will come and pay. If you don’t have national legislation, or if it’s not very sophisticated, then it is a recipe for disaster. Only lawyers will benefit and they will argue anything in court and eventually nobody is paid.”

Prestige compensation issue still ‘far from resolved’

The IOPC model is now being copied for the HNS Convention, which covers pollution caused by hazardous and noxious substances. The IOPC is being lined up to take on management of the HNC funds.

The IOPC model is also being considered for possible international pollution funds to cover the carriage of oil through the Arctic and Antarctic.

The Deepwater Horizon disaster — 11 deaths, up to 627,000 tons spilt, a $65bn compensation bill — showed that there may be a need for a similar fund to cover the offshore business.

“It is a system that works in practice,” Maura says, pointing out that the signatories to the IOPC have made it work. “We achieve something like 99% of contributions paid. What other UN body can say that?”

IOPC: Calming troubled waters

IOPC: Calming troubled waters

The head of the international oil spill compensation organisation says the system has been a success over the past four decades

Jose Maura knows first-hand what it is like to experience pollution from an oil spill. He saw the beaches of northern Spain where he used to play as a boy stained by the cargo of thick heavy fuel oil that spewed from the stricken tanker Prestige in November 2002.

At the time he was four years into his career at the United Nations’ International Oil Pollution Compensation (IOPC) Funds, which he has headed as secretary general for a decade.

Despite its impact, the Prestige disaster taught him that spills can be cleaned up and the compensation issues successfully resolved.

“When you go to the beach and you see that everything is black, then you get the smell, it is not a nice feeling,” he remembers of the spill.

“So I understand why people get upset, but with good cleaning technique and without damaging the environment, we know how to resolve it and we are seeing that all the time. Now you see the beaches [of northern Spain], everything is gone, it is immaculate and the environment has been restored.”

Auditor says oil-spill fund in sound financial health

Each year the London-based IOPC collects a levy from 400 oil-receiving companies in the 115 countries that are signatories to the main oil spill compensation conventions.

The money is used to meet clean-up costs and compensate victims for the damage that can be caused by the marine transportation of, on average, 1.5 billion tonnes of oil round the world every year.

In October this year, the IOPC celebrated its 40th anniversary, and Maura says its history has shown it to be an effective system to cope with spills.

It has resolved some of the industry’s most notorious pollution incidents, including the Prestige (63,000 tons of oil spilt off Spain, Portugal and France), Sea Empress (72,000 tons off Wales in 1996), Erika (25,000 tons off France in 1999) and Hebei Spirit (10,800 tons off South Korea in 2007) and paid out more than $870m in compensation over that time.

+ point

Statistics show oil spills are getting fewer but the environmental protection issues, litigation and compensation culture that surround such disasters are getting tougher.

In the peaceful setting of his office by the River Thames, Maura reflects that settling compensation claims can be violent as well as highly litigious.

“Following the Erika, we set up a claims office in France in the former office of a bank and there was one claimant who was not a happy man because we did not pay compensation to him.

He decided to take the case into his own hands and take a front-end loader and smash it against the office. Luckily it was on a Saturday morning and nobody was there, but that is the level of things that you can face.”

Failures to pay tanker spill compensation to be investigated

The Erika generated 7,000 claims, of which 700 were contested by the IOPC in the French courts. “That is a lot, but we won 99% of the cases in France, which means we have good lawyers, but it also means we’ve done a lot of work behind the scenes to assess the claims,” Maura says.

The Hebei Spirit spill generated 127,483 claims amounting to KRW 4.2bn ($3.8m). The IOPC had to employ 700 extra people to cope.

The organisation has also found itself caught up in the political and legal rows that inevitably follow an oil spill. Under the international conventions, shipowner and IOPC liability is limited.

But that limited liability is being tested in the courts of Madrid and London in a row that followed a Spanish ruling that the Prestige’s owner, Mare Shipping, and its P&I insurer, the London Club, are fully liable to foot the whole $1.6bn bill for the disaster.

Maura is too diplomatic to be drawn into comment on the case, but such court decisions have raised questions over whether all countries are being treated equally under the oil compensation regime.

The main contributors to the fund, such as Japan and India, are riled when they see some developed countries seeking to get a better deal.

Probe into Sanchi disaster should act as catalyst for improvement

There are other issues for the IOPC to tackle. China is by far the world’s largest oil importer, accounting for 400 million tons annually, but it is not one of the 115 signatories to the main oil spill compensation conventions. It has its own national pollution laws that fall well short of the funds available through the IOPC.

The Sanchi disaster in January 2018 could have been a pollution disaster for China had the suezmax tanker, which was hit by the bulker CF Crystal in the South China Sea, been carrying crude oil rather than condensate.

Maura has tried to persuade the Chinese and others to get onboard with the IOPC. “The problem is, if you don’t have a convention, you only have national legislation, and that is often not much. The beauty of a convention is you have uniform rules, you know where you stand,” he points out.

“You have strict liability and you know that in the end someone will come and pay. If you don’t have national legislation, or if it’s not very sophisticated, then it is a recipe for disaster. Only lawyers will benefit and they will argue anything in court and eventually nobody is paid.”

Prestige compensation issue still ‘far from resolved’

The IOPC model is now being copied for the HNS Convention, which covers pollution caused by hazardous and noxious substances. The IOPC is being lined up to take on management of the HNC funds.

The IOPC model is also being considered for possible international pollution funds to cover the carriage of oil through the Arctic and Antarctic.

The Deepwater Horizon disaster — 11 deaths, up to 627,000 tons spilt, a $65bn compensation bill — showed that there may be a need for a similar fund to cover the offshore business.

“It is a system that works in practice,” Maura says, pointing out that the signatories to the IOPC have made it work. “We achieve something like 99% of contributions paid. What other UN body can say that?”

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